BNP Paribas creates Collateral Access umbrella for buy- and sell-side clients
Incoming regulation, in particular EMIR and Dodd-Frank, has increased the need for collateral for all OTC derivatives, whether cleared or non-cleared and is creating problems for the industry. The new liquidity standards of Basel III will also affect future demand for High Quality Liquid Assets.
“Providing a solution to mitigate counterparty risk remains at the heart of customers’ requirements. But our clients expect even more than that,” said Patrick Colle, chief executive at BNP Paribas Securities Services. “Optimisation and protection of collateral are becoming critical decision factors; whether long or short, clients want to be able to maximise the use of their assets. Those in need of collateral must best allocate their limited resources or effectively source eligible assets. Protection of the collateral portfolio is also a key concern. ”
Hélène Virello, head of collateral management at BNP Paribas Securities Services, added: “We are seeing increasing demand from clients to support them with a solution through the entire transaction process – from trade capture to reporting, including liquidity solutions. Collateral Access allows our clients to be fully compliant with new regulations through limited investments and within a short timeframe. We work with an open model, interfaced with multiple counterparties, clearers, custodians and market infrastructures. It has been carefully designed to address the challenges facing the industry in the years to come.”
The firm has made collateral management a key strategic initiative across its business lines, and reinforcing that by bringing its offerings under the Collateral Access umbrella.
There are three main strands:
- Efficient Risk Mitigation: aiming at actively managing counterparty risk, it relies on robust trade management for all instruments (including both cleared and non-cleared derivatives), independent portfolio valuation, margin and dispute management – all supported by industry leading platforms.
- Optimisation and transformation: providing margin requirement simulation, it helps optimise collateral allocation and take advantage of financing solutions or lending opportunities.
- Protection and velocity: ensuring safekeeping and segregation of collateral, it provides connectivity to market infrastructures and an innovative settlement set-up, to reduce liquidity friction between counterparties.